Builders Betting Big On Luxury Townhomes As Millennials Eye Homeownership
The once no-frills townhome has undergone dramatic makeovers and is finally ready for its close-up. Across the country, builders are rolling out luxury townhomes with increased square footage to emulate the space and feel of single-family detached homes.
“There are plenty examples of townhouses being built as luxury homes,” says Robert Dietz, chief economist for the National Association of Home Builders. “You’ve got your four-story townhouses, particularly in high-cost metro areas,” he says.
NAHB consumer preference data suggests that like prior generations, Gen-Xers and Millennials desire homeownership, and for a variety of reasons, townhomes fit the bill.
“They want a suburban-type feel, but the one thing that may have changed, particularly for Millennials, is they want a little bit more walkability,” says Dietz. “So the townhouse development sort of checks the box.”
New townhome construction has been on the rise since 2009. Over the last four quarters, ending with the third quarter of 2018, townhouse starts totaled 123,000, 24% higher than the previous four quarters. The current market share of townhouses stands at about 14% of single-family construction, a post-recession high.
“I do think that over the next five years that 14% share is going to continue to rise and probably approach 20% over that time period,” says Dietz.
Townhouse construction is set to expand further given the demographics of Millennials transitioning from rentership to homeownership as well as ongoing land constraints and the demand for walkable neighborhoods.
“If you’re in a development where you’ve got higher-density housing, you’re going to have greater opportunities for retail and commercial that’s walkable,” explains Dietz. “It’s a neighborhood where you don’t have to buy a gallon of gas to buy a gallon of milk. You can walk to that retail. Single-family attached townhouses provide that kind of higher density.”
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Felix Bravo, a sales executive with Pordes Residential in Miami, is selling townhomes at 101 Bay Harbor and Palm Villas in Bay Harbor Islands, where square footage ranges from 2,300 to 3,000 square feet. Prices start at $900,000 at 101 Bay Harbor and $1.2 million at Palm Villas.
“When a lot of people think of townhouses, they think of these very narrow homes because the floors are stacked on top of one another,” says Bravo. “But with the amount of space we have, they have a very open feel.”
The open floor plans, high ceilings and amenities at 101 Bay Harbor are a draw for prospective buyers who are planning to settle down and raise families. “We have a ton of young couples in their late 20s to mid-30s who are starting families,” says Bravo.
The first level at 101 Bay Harbor units includes a garage, guest bedroom and full bathroom. The second level consists of the kitchen, dining area, living room, walk-in pantry and half bathroom, while three bedrooms and two full bathrooms comprise the third floor. Topping the amenities is a private rooftop terrace with a jacuzzi and outdoor kitchen.
“The wow factor is how much space they have and how luxurious the interior is in terms of appliances, cabinetry and the kitchen island,” says Bravo. “The second biggest wow factor is being able to go up to your own private rooftop and hopping into your private jacuzzi. It makes you feel like you’re worth a million bucks.”
While 101 Bay Harbor townhomes have stairs, Palm Villas’ units, which are popular with Baby Boomers, have private elevators.
Jeff Benach, principal of Chicago-based Lexington Homes, is seeing an increase in families and move-down buyers looking for spacious townhome options at its communities, including Lexington Heritage in the Chicago suburb of Arlington Heights. The builder has created a collection of townhome designs that live like a single-family detached home due to wider layouts and semi-private backyards.
Homes in Lexington Heritage’s Club Collection, which are two-story townhomes priced from $399,990 and measuring 1,649 to 1,950 square feet plus basement, have two to three bedrooms and attached two-car garages. The homes include high-end finishes such as hardwood floors, large windows and granite countertops.
“Townhomes typically tend to be long and narrow, but by shifting the footprint to be wide instead of deep, we gave these homes a more expansive feel in the configuration of the open-concept kitchen and great room,” says Benach. “The plans also have full basements with 9-foot ceilings that can add a whole extra level of living space to the home when finished.”
Megatel Homes, one of North Texas’ biggest builders, is opening the doors of its Wade Settlement community in Frisco, Texas. The city is home to The Star, the headquarters and practice facility for the NFL’s Dallas Cowboys. The mega-complex spans 91 acres and includes a stadium, restaurants, shops, offices and health facilities in a walkable setting.
Sales consultant Rex Masterman says the first phase of Wade Settlement will include 150 townhomes ranging from 1,950 to 2,300 square feet and priced from $349,000. Drawing inspiration from upscale single-family detached homes, all two-and-a-half-story floor plans include a balcony, three bedrooms, three and a half bathrooms, granite countertops, tankless water heaters and a two-car garage.
At Elevate in Civita, a master-planned community in San Diego’s Mission Valley, home builder ColRich plans to build five three-story townhomes as part of a 62-unit project. ColRich development coordinator Briar Belair says the townhomes, which are expected to be completed in late 2019, will take a page from single-family residences, spanning 1,700 to 2,000 square feet. Pricing has not been determined. Each townhome will have a two-car garage and private outdoor space such as a balcony or deck.
“We typically market them as a lock-and-leave lifestyle,” says Belair. “You have the low-maintenance of condos, but it feels like a single-family home.”